Crain’s New York Business has a recent story on employee suits alleging that their employers breached their fiduciary duty in recommending company stock for 401k plans.
The contention in these suits, including on involving a bond insure that was backing junk mortgages, was that the employers did or should have seen the writing on the wall about declining stock values, but kept pushing company stock to employees. Our own Paul Secunda, as well as John commented:
The Ambac case represents a potentially expensive problem for many Wall Street employers. Lehman, Citigroup, Bank of America, Merrill Lynch, Wachovia and others have been sued by angry employees. Sterling Equities, the real estate investment firm chaired by Mets owner Fred Wilpon, is also the target of a fiduciaries suit which alleges that Mr. Wilpon and others inappropriately invested the bulk of their employees’ retirement money with Ponzi schemer Bernard Madoff.